Global Funds Network Calastone To Move Settlements System To Blockchain

Global funds transaction network Calastone is planning to move its entire system for fund trade clearing services to a blockchain by May 2019.

Calastone operates a transaction network for the mutual funds industry in the United Kingdom and internationally. The company’s services include order routing, settlement, reconciliation and valuation, re-registrations, trade notifications, price reporting, BIC hosting, e-Dealing, and straight-through-processing consulting. It currently serves more than 1,700 fund managers, distributors, and transfer agents worldwide, including JPMorgan Asset Management, Schroders, and Invesco.

By transfering its entire settlements system to a blockchain, Calastone is hoping to save £3.4 billion ($4.3B USD) in fund distribution costs. The firm said that the transfer will transform current services by using distributed ledger technology (DLT) to automate over nine million messages that are sent between counterparties every month, worth more than £170 billion ($217B USD).

“By bringing all trading relationships together, within our shared blockchain-enabled infrastructure, all participants benefit through the real-time view of each record and powerfully, from a data perspective, a single version of the truth,” said Campbell Brierley, Calastone’s chief innovation officer. “This alleviates common friction points such as reconciliation and settlement.”

Julien Hammerson, CEO of Calastone, said that today, funds are “hampered by continually rising costs and threat of competition, ultimately rendering the current system economically and operationally unsustainable.”

“Customers of Calastone will continue to receive the excellent service they currently receive, and the internal changes we are making will not have a direct impact on them,” the firm said. “However, as the DMI is rolled out, customers will have the option to migrate to the new offering, and benefit from the reduced reconciliations and access to enhanced services on offer.”

In February of this year, Calastone published an in-house research, claiming that asset managers could save $2.7 billion a year if the investment industry switched to a blockchain infrastructure.

“The numbers represent the tangible, financial value that a blockchain-enabled distributed market infrastructure can deliver by stripping-out many of the remaining inefficiencies currently embedded in the system,” the firm said at the time. “A distributed market infrastructure potentially offers a scalable solution to meet the needs of fund industry participants and investors now and for the future.”